Pivoting with New Technologies: How to Successfully Diversify Your Portfolio

As wind becomes increasingly competitive, many developers are looking to expand their portfolios in favour of more affordable solar.

Expanding into new technologies can be challenging for any business – but in energy, project diversity is becoming particularly important success. Having a diverse portfolio ensures that when some projects fail, the company still profits overall. This is becoming particularly common in some regions in Europe and in the U.S., where wind developers are facing new problems associated with public attitudes, land rights, and competitive auctions. To top it all off, with the declining costs of solar, diversifying is looking more attractive now than ever.

A recent study of public opinion of small wind turbines in Europe found that although around 70 to 80 percent of people support wind farms, they still hold concerns about their noise and aesthetics. Forty percent of respondent in that same study said they would not be willing to install a small wind turbine, mainly due to concerns about economics, visual impact and doubts about efficiency.

Meanwhile, Germany recently reformed its energy procurement system to switch from feed-in-tariffs to a competitive auction system. The new system of auctions will more closely control the amount of capacity added each year and use market-mechanism elements to support renewable energy investment. However, this new auction system was a mixed bag for some in the wind sector when it was announced wind capacity additions will be lower than expected.

A lull in new wind projects and falling PV prices has changed the attitudes of many wind companies as they search for new opportunities. Some wind developers see solar projects as an opportunity to expand their portfolio. Solar also comes with some advantages. The electricity generated from PV panels is more predictable and often generated at peak times leading to larger and more predictable cash flows. One clean energy executive recently said when discussing this trend that one of the hardest things in building solar is trying to decide what PV prices will be when their company is ready to buy.

However, many overlapping skillsets among power development staff can help ease this transition. The nature of wind power development means companies already employ GIS mapping experts and engineers to handle and design transmission. While applying those skills to build solar projects are not exactly the same, they are extremely similar—as wind and solar do compliment each other on the grid. For these reasons, wind developers entering the solar market, especially larger companies, are focusing on utility-scale projects, which lines up better with their expertise.

When a developer does decide to make this transition, having an in-house asset investment management system that supports pipelines and portfolios with various energy technologies is crucial to project success. Diversifying projects and building new ones across various technologies is how small companies become major players, and maintain a competitive advantage.

Having a system to manage this process ensures project managers trust their pipeline data and provide real-time accurate pipeline information on key performance and competitive benchmarks. Without an Energy ILM system, this same information can be susceptible to human error. Not having this information about the project pipeline while shifting to new technologies can allow for projects managers to miss out on key trends and opportunities. This is why having information such as key portfolio metrics, current events, instant portfolio valuation, and project risks at an instant are all crucial for successfully expansion. Because if renewable developers want to elevate their solar business from a modest to a very competitive piece of their overall business, having complete control and insight is necessary for competing, and winning.